Sterling rises above $1.40 for first time since February

Monday,   10-May-2021   03:23 PM (IST)

The pound broke above the key $1.40 level for the first time in more than two months on Monday, reaching as high as $1.40725 in early London trading, despite a win for pro-independence parties in Scottish elections. Pro-independence parties won a majority in Scotland’s parliament on Saturday, paving the way for a high-stakes political, legal and constitutional battle with British Prime Minister Boris Johnson over the future of the United Kingdom. But the pound strengthened as market participants did not interpret this as a near-term risk and welcomed the fact that Scottish leader Nicola Sturgeon said that her first task was to deal with the COVID-19 pandemic. Any second referendum on Scottish independence requires the approval of the UK government and Prime Minister Boris Johnson has ruled this out, saying the country needs to focus on more pressing concerns such as the recovery from the pandemic. Analysts said the move in cable was due more to dollar weakness, as the greenback dropped to a two-month low after a disappointing U.S. employment report. The Bank of England said Britain’s economy would grow by the most since World War Two this year and slowed the pace of its trillion dollar bond-purchasing programme, but stressed it was not reversing its stimulus.